Israel cut fuel supplies and shut all border crossings with the territory controlled by the radical Islamic group on Friday in response to ongoing rocket attacks from Gaza.
The United Nations condemned the move on Friday as Gaza's only power plant was switched off, plunging the center of Gaza City into darkness and triggering the closure of factories and filling stations.
"Fuel supplies from Israel to Gaza were cut over rocket fire by Hamas. But using fuel for purposes other than electricity generation was Hamas's decision," Israeli Foreign Ministry spokesman Arye Mekel said suggesting the Islamists have intentionally exaggerated the impact of Tel Aviv's moves.
Israel and Egypt supply 140 MW of electric power to Gaza, where 1.5 million people live, which is 75% of the territory's demand.
Mekel said while the Gaza population lives without electricity, electric power is uninterruptedly supplied to plants producing missiles.
Palestinian energy officials cited on Monday a transformer breakdown, which makes supplying energy to Gaza City, home to half of the enclave's population, impossible.
"The broken transformer is in the border area, and Israeli troops have not given our repairers a chance to rectify the breakdown," officials told RIA Novosti.
The enclave's largest hospital Al-Shifa was reported to have switched over to an autonomous power plant, and the city's sewage system was turned off on Sunday night.
A Gaza Health Ministry official said on Monday the blackout caused the death of five patients in hospitals the early hours of Monday.
"We have cancelled a lot of operations due to a lack of electricity and fuel oil," said Khaled Radi. "Five people have died as a result. The death toll could rise, if the situation is not changed within the next few hours."
But Mekel dismissed the allegation, saying talk of a humanitarian crisis in Gaza was a major exaggeration. "There is no shortage of basic foodstuffs, and Palestinian patients, who need treatment in Israeli hospitals, are still allowed to go to Israel."
At least two Palestinian militants were killed during Israeli air attacks on the Gaza Strip on Sunday, medics in the Palestinian enclave said on Monday. And one militant was killed in the occupied West Bank today, according to hospital officials.
Israel has been conducting air attacks on Gaza as well as ground raids into the enclave, controlled by Hamas since June, to curb rocket attacks into southern areas of the Jewish state. Israeli troops also raided the West Bank searching for militants suspected of planning terrorist attacks in the Jewish state.
Israel has killed about 40 Palestinians in the past week. Militants in the Palestinian enclave have launched more than 200 rockets at Israel in the same period, according to the Israeli military.